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As Trump talks up coal, renewable energy steps into the lead

Nigel Topping, CEO of the We Mean Business coalition

At COP24, the Trump administration is touting coal and gas as the energy of the future. But leading US energy companies are doubling down on renewable energy as it becomes increasingly competitive, with more and more large corporate customers demanding access to clean power.

That’s not just because of the climate credentials of renewables. But because solar and wind are proving to be among the cheapest power sources available, providing secure access to energy that is affordable, and generating good and long-term jobs.

One large corporate buyer embracing the benefits of renewables is oil major ExxonMobil, which recently secured a 12-year agreement to supply its Texas operations with 500 MW of wind and solar, from early 2020. The tenure is the largest ever renewable power contract inked by an oil company and will provide enough electricity to supply around 400,000 average US homes.

To date over 150 of the world’s most influential companies have committed to source 100% renewable electricity through RE100*. These companies, which include auto giant General Motors and the world’s biggest company by revenue Walmart, are now creating demand of over 184 TWh of renewable electricity annually – more than enough to power New York state.

These leading businesses are also providing a new source of finance for a faster roll out of renewable energy around the world, by investing over $94 billion to reach their 100% goals.

Utilities are reacting to this growing market opportunity. One of America’s largest utilities Xcel Energy is committed to zero-carbon power by 2050, as part of a sweeping new “clean energy vision”.

To date, over 40 power utilities have committed to bold climate action through the We Mean Business coalition’s Take Action campaign, including five of the world’s top ten power utilities by market cap. This also includes over 20 companies that have committed to science-based targets, such as Europe’s Ørsted, NRG Energy in the US and CLP in China.

Growing business opportunity

The strength of the market opportunity is clear. In 2017, global solar capacity grew faster than all fossil fuels combined, including coal, oil and gas-fired power stations.

Renewables are outcompeting traditional power on price. According to research by the World Economic Forum, unsubsidized renewables were the cheapest source of electricity in 30 countries in 2017, and renewables are predicted to be consistently more cost effective than fossil fuels globally by 2020.

One of the most striking developments has been with solar. Utility-scale solar plants – those capable of feeding power directly to the grid – have seen a price decrease of 86% since 2009, a recent report from Lazard shows. Solar power now costs $50 to produce one megawatt-hour, while coal power costs $102 for the same amount of electricity, according to the analysis.

Even though policy at the federal level in the US is still supportive of coal, the support for renewables from cities states and regions is growing all the time.

More than 80 cities, five counties, and two states in the US have committed to 100% renewables and six of those cities have already hit the target, according to data from the Sierra Club. In addition, a Michigan lawmaker is proposing the state join California and Hawaii in their commitment to going 100% renewable.

Jobs, jobs, jobs

The opportunity is not just there for the corporate customers and suppliers – it’s also helping to create good, long-term jobs.

Global renewable energy employment surpassed 10 million jobs in 2017, an increase of more than 5% compared with the previous year, according to IRENA. In the US, 786,000 people were employed in the renewable energy sector in 2017, up 1% from 2016.

Meanwhile, US coal plant closures have been continuing a pace since the current administration took office in January 2017, despite reversing the previous administration’s energy and climate policy agenda in favour of coal plants.

Last year, in ‘coal country’ West Virginia, Chris Beam the president of the state’s largest power utility Appalachian Power, was asked by the state governor to get behind Trump’s call for more coal plants. Beam said that’s not going to happen because the company’s industrial customers – such as Steel Dynamics, Koch Industries, and Marathon Petroleum – are focusing more and more on renewables.

This trend away from coal highlights the need for the US companies and the government to engage in a just transition for workers at risk of unemployment. In Europe, Enel and Ørsted – two power companies transitioning away from fossil fuels to renewable generation – have pledged to facilitate social dialogue with workers and their unions and to meet these core labour standards themselves.

This engagement with a just transition, will help ensure that the benefits of a growing renewables industry are not derailed by any negative impacts from moving away from coal. Boosting jobs growth in this way will help support the strong public backing for renewables, which surveys show is already well established.

The shift to renewables is also being driven by a wave of technological advances, which is opening new markets and opportunities. That technology is not just helping to drive down the cost of producing electricity from solar and wind, but is also helping to advance the storage, transference, management and distribution of power.

The energy storage market will double six times by 2030, with more than $100 billion being invested across the globe in the next 15 years, according to Bloomberg New Energy Finance.

The opposition from the US federal government is not just at odds with the shift to clean, affordable and safe power being embrace by the country’s corporate buyers, power providers and citizens. Outside of the US, many countries are aggressively ramping up their commitment to renewable power, such as India, which has increased its 2022 renewable energy target by 28 percent to 227 GW, from 175 GW previously – more than three times the current 70 GW.

These countries, along with the seven countries already at, or very near, 100% renewable power grids, realize that today we’re in a future where: “There is no technical or economic barrier to transitioning the entire world to 100 percent clean, renewable energy with a stable electric grid at low cost”. That’s the conclusion of Mark Z. Jacobson, a professor of civil and environmental engineering at Stanford University, who led a recent study in the rollout of renewable energy.

Grids delivering 100% renewable electricity wouldn’t have been imaginable just a few years ago. But research by the Energy Transitions Commission shows that by as early as 2035, it will be feasible in many geographies to build a near-total renewable power system.

By stalling efforts to embrace the zero-carbon grids of the future, the US administration risks the country losing competitive advantage to countries like India and China, which will increasingly benefit from cheap renewables as a driver of growth and jobs.

By embracing the shift to renewable energy, the US administration could help provide jobs, growth and innovation, as well as safe, affordable and clean power.

Great to see support for #netzero by 2050 with #Germany's draft climate law #Klimaschutzgesetz. Clear long-term goa… https://t.co/Mnt8OmEWax

The transition to a zero carbon economy is inevitable. Now is the time for companies to start preparing for a zero carbon future.

Jill Duggan, Director of The Prince of Wales’s Corporate Leaders Group

This milestone [Paris] Agreement is an important step in ensuring we can maintain quality of life on our planet for future generations.

Neil McArthur, CEO Arcadis

Now businesses are enabled to work together with governments and communities to shape the policies and take the actions necessary to transition to a low carbon future.

Richard Lancaster, CEO of CLP

We are entering an era of system transformation. Business is already playing a leadership role through global collaboration and low carbon partnership initiatives to drive innovation and structural change.

Peter Bakker, President of WBCSD

The global transition to a low-carbon economy is urgent, inevitable, and accelerating faster than we ever believed possible.

Paul Polman, CEO of Unilever and Chairman of the World Business Council for Sustainable Development

We are already not only bending the curve of emissions but actually already in a global consensus about the inevitability of the major shift that will occur in this century.

Christiana Figueres

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Coca-Cola HBC

In anticipation of changing weather patterns and potential shortages of water, we have made water efficiency a key strategic ambition shaping our product range.

Syngenta

Water risks pose social, environmental and ultimately financial risks. Therefore it is obligatory for all sites, affiliates and operations to include a water risk assessment within their overall risk assessment procedures.

Roche Holding

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Anirban Ghosh, CSO, Mahindra Group

We find that many of our suppliers can reduce their energy consumption by 5% or more with basic training and implementation of low-cost/no-cost improvement measures.

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Robert Noel, Chief Executive, Land Securities

For a company with our global footprint, increasing our energy productivity by two-thirds as we have done since 2002 means that we are spending over US$100 million less in energy bills each year than if our energy productivity had remained constant.

Going 100% renewable will deliver on our consumer promise to deliver brands that are responsibly produced in a world of finite resources.

Marc Engel, Chief Supply Chain Officer, Unilever

Climate change is a huge risk to the long-term supply of safe, high quality ingredients for Nestlé’s products as crop yields fall and production areas shift. We are determined to play our part in taking climate action by purchasing renewable electricity.

Pascal Gréverath, Head of Environmental Sustainability, Nestlé

Renewable energy plays a key role in achieving our ongoing commitment to carbon neutrality, as we aim to use 100% renewable energy to meet our global electricity needs by 2020.

Anthony Cammarata, Managing Director, Goldman Sachs

Electricity costs are one of the largest components of our operating expenses at our data centers, and having a long-term stable cost of renewable power provides protection against price swings in energy.

Urs Hölzle, Senior Vice President, Technical Infrastructure, Google

By investing in renewables we can not only reduce our emissions but also future proof the business.

Laurel Peacock, Senior Manager of Sustainability, NRG

We wouldn’t be doing this if it didn’t make business and economic sense… It is the way the market is trending and what our customers are demanding.

Laurel Peacock, Senior Manager of Sustainability, NRG

Our target puts us in a good position vis-à-vis government regulation. We are fully compliant with the UK government’s existing targets, and would be well placed were they to introduce more stringent regulation for companies.

Tom Byrne, Energy Manager at Land Securities

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Andy Howard, Head of Sustainable Research at Schroders

By doubling the efficiency of our US fleet [over five years], Walmart avoided the emission of nearly 650,000 metric tons of CO², while also saving nearly US$1 billion in the past fiscal year.

Rob Walton, Walmart

Ambitious greenhouse gas reduction goals help our teams rally around low-carbon innovation. Of course knowing that our goals are backed by the current climate research increases buy-in and commitment at all levels of the company.

Alexandra Palt, Chief Sustainability Officer, L’Oreal

We are working towards building a clean energy future. Expanding the share of renewables is key to addressing the chronic energy crisis our country is facing today.

Ramadas Kamath, Executive Vice President and Head – Infrastructure and Sustainability, Infosys

I believe that companies are, above all, agents of transformation. We all work at an intersection of economic, political, social and environmental dimensions and have either positive or negative impacts on all of them.

Guilherme Leal, B Team Leader and one of the founders of Natura Cosméticos

I spend a lot of my time saying to business leaders, we are citizens of the world. We cannot just leave things to the social sector and to the politicians to speak up about these climate change issues. We have as much clout as they, if not more than some of them, and we have the responsibility to speak out. And it makes good business sense.

Richard Branson, Founder, Virgin Group

…we’re working in partnerships even with our competitors, but also with governments and other industries. But to help us get there, we need policymakers to play their role. We need them to give us certainty. We need them to level out the playing field.

Hannah Jones, Vice President Sustainable Business & Innovation, Nike

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Mike Barry, Director of Sustainable Business, Marks & Spencer

From a policy perspective, General Motors and businesses in general look for long-term certainty and clarity. When you get the market, the customers, our products and policy all aligned, that’s when you can drive true transformation of an industry.

David Tulauskas, Director Sustainability, General Motors

Two fiscal policy tools can drive decarbonisation: carbon pricing and the end of fossil fuel subsidies. Paying a price for emissions while, at the same time, encouraging the activity that causes them is perverse.

Sandrine Dixson-Declève, Director of The Prince of Wales’s Corporate Leaders Group

No CEO would survive if they said climate change is not real

Mike Bloomberg, Former NYS Mayor

Moving capital toward a low-carbon economy protects their beneficiaries’ returns, and is one of the fastest ways to address global warming. Companies take note when investors take action, and when money moves, the world moves too.

Lance Pierce, President of CDP North America

California’s political and business leaders arrived (in Paris) with the clear conviction that climate is not only real, but demands action. Our experience offers a wealth of practical lessons for how to make rapid, sustainable progress toward the clean energy future.

Tony Earley, Chairman, CEO and President, PG&E

Science shows that climate change will reduce food productivity and food security at the same time our world’s population is growing and requiring us to feed more people with fewer natural resources.

John Bryant, CEO, Kellogg Company

As a global food company, we recognize the significant impacts climate change can have on our business if left unaddressed.

Ken Powell, CEO, General Mills

(Climate change) is absolutely a threat. And that’s why we’re doing all that we’re doing today.

Barry Parkin, CSO, Mars

I think what we’ve shown already in North Carolina is that when you provide the incentives – the investments tax credits for solar; when you have the renewable energy portfolio — it works.

Letitia Webster, Senior Director, VF

Low-carbon, sustainable investments are key to our future.

Tom DiNapoli, New York State Comptroller

We want the underlying companies in our ($300 billion) portfolio to be aligned with the transition to a low-carbon global economy.

Anne Simpson, Global Governance Investment Director, CalPERS

If you can do one thing for me today, please, never refer to clean energy as “alternative energy” again.

Getting to the Paris Agreement was the easy component, it meant setting the starting line. Now we have to turn those intentions into implemented activities and projects.

Christiana Figueres, Executive Secretary, UNFCCC

There seems to be a tendency to believe that now that the Paris Agreement is done, it is now up to governments. But the real action starts now. The business community and civil society need to push governments so that they will keep this agreement.

Ban Ki-Moon, Secretary-General, United Nations

The once unthinkable has now become unstoppable. This train is moving. It started at the Paris station, it has to go and move.

Ban Ki-Moon, Secretary-General, United Nations

The entry into force of the Paris Agreement just ten months after COP21 is a defining moment for the global economy.

Paul Polman, CEO of Unilever and Chairman of the World Business Council for Sustainable Development

The global transition to a low-carbon economy is urgent, inevitable, and accelerating faster than we ever believed possible.

Paul Polman, CEO of Unilever and Chairman of the World Business Council for Sustainable Development

We are entering an era of system transformation. Business is already playing a leadership role through global collaboration and low carbon partnership initiatives to drive innovation and structural change.

Peter Bakker, President of the World Business Council for Sustainable Development

Now businesses are enabled to work together with governments and communities to shape the policies and take the actions necessary to transition to a low carbon future.

Richard Lancaster, CEO of CLP

This milestone Paris Agreement is an important step in ensuring we can maintain quality of life on our planet for future generations.

Neil McArthur, CEO Arcadis

The significance of the Paris Agreement and its universal impact cannot be underestimated. The transition to a zero carbon economy is inevitable. Now is the time for companies to start preparing for a zero carbon future.

Jill Duggan, Director of The Prince of Wales’s Corporate Leaders Group

What the Paris Agreement means for business

Coalition Partners

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